Palantir (NYSE:PLTR) has been one of the names to benefit the most from the rise of AI, with its shares surging 87% over the past 12 months. This impressive gain underscores investors’ confidence in the big data specialist’s ability to capitalize on this transformative opportunity.
And a new partnership with tech colossus Microsoft could further boost its case. The two companies have now joined forces to provide the U.S. government with cloud, AI, and analytics solutions. The agreement stipulates that the firms will integrate Microsoft’s large language models (LLMs) into Palantir’s AI Platform (AIP) using the Azure OpenAI service, specifically within Microsoft’s government and classified cloud environments. Through this partnership, Palantir will roll out its full suite of products (Foundry, Gotham, Apollo, AIP) on Microsoft’s cloud platforms, enabling government agencies to develop AI tools for action plans and logistics.
Wedbush analyst Daniel Ives, a long-time supporter of Palantir, describes the collaboration as “potentially game-changing.” He notes, “With this marquee deal solidified and MSFT leveraging PLTR for AI and LLM capabilities to the US government, the company can now increase the pace of AI implementation while PLTR continues to accelerate AIP adoption within the federal sector. We believe this will be a launching pad for the PLTR AIP story to hit the DOD and broader Beltway ecosystem over the next 12 to 18 months.”
Before AI became a central part of Palantir’s narrative, government work was considered the company’s bread-and-butter, but the commercial side of the business is now seen as being the main beneficiary of the AI opportunity. Ives, however, emphasizes that this partnership underscores the continued importance of Palantir’s government work. While the availability of these services hinges on agency authorization and accreditation, Ives considers the deal a “major step towards generating more durable revenue streams across the US government.” Ives believes the company’s ability to build use cases and the growing demand for its government software offerings are driving increased interest across the federal landscape.
All in, Ives rates PLTR shares an Outperform (i.e., Buy), while his Street-high price target of $38 factors in one-year returns of ~27%. (To watch Ives’ track record, click here)
However, this optimistic outlook isn’t widely shared on Wall Street. PLTR stock claims a Hold consensus rating, based on a mix of 3 Buys, 5 Holds and 6 Sells. Moreover, going by the $22.42 average price target, a year from now, shares will be changing hands for a ~24% discount. (See Palantir stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
